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RTC asked to junk petition vs terms for third telco bidder

The Office of the Solicitor General has asked a Manila City court to dismiss a petition of businessman Mel Velarde’s NOW Telecom Co. Inc. to stop the government’s selection for the country’s third telco player.

In its 32-page memorandum filed for the National Telecommunications Commission, Solicitor General Jose Calida asked Manila City RTC Branch 42 to deny the prayer of NOW Telecom for issuance of injunction order enjoining the bidding process that will officially start on Wednesday, Nov. 7.

Calida said that the court cannot restrain or enjoin the selection process for a new major player due to the prohibition on lower courts from issuing a temporary restraining order or injunction order under Republic Act 8975.

“R.A. 8975 prohibits the issuance of any injunctive writ to prohibit or refrain, among other, the bidding or awarding of an infrastructure project of the government... Plaintiff NOW Telecom’s writ of preliminary injunction rot restrain the bidding process for the selection of the NMP (new major player) is legally proscribed,” the Solicitor General said.

On technical grounds, the chief state lawyer sought for the outright dismissal the petition due to violation of forum shopping and failure to exhaust administrative remedies by the petitioner.

Calida insisted that the plea for injunction of NOW Telecom should be considered moot already after the firm submitted to the NTC its position that it wants the selection process to proceed as scheduled.

“In an evident change of heart brought about perhaps by its desire not to incur the ire of President Rodrigo Duterte, who spearheaded this important infrastructure project of the government, plaintiff NOW Telecom, during the hearing on its application for a writ of preliminary injunction, manifested that it wants the selection process for the NMP to proceed as planned,” the Solicitor General said.

Calida also argued that the petition was a mere dilatory tactic by a bidder.

“Evidently, the Complaint was filed by plaintiff NOW telecom upon realizing that it is not, after all, qualified to participate in the bidding process. Hence, the imperative need, from its end, to prevent—if not delay—the selection process if, for no other reason, but to buy time,” he said.

With these arguments, the solicitor general asked the RTC to dismiss the petition for lack of merit and instead allow the bidding to proceed as scheduled.

It also justified key provisions in the Terms of Reference (TOR) for the bidding procedures set by NTC, which were questioned by NOW Telecom.

But contrary to the allegation of petitioner, the statutory counsel of NTC argued that the terms under Memorandum Circular No. 09-09-2018 do not violate applicable laws.

This position was shared by no less than Justice Secretary Menardo Guevarra, who had pointed out that the Terms of Reference for the bidding procedures set by the NTC were “legal and not violating any laws.”

The chief state lawyer argued that P700-million participation security, the P14 to P24-billion performance security, and the P10-million non-refundable appeal fee are all necessary in the determination of financial eligibilities of bidders and not a “money-making scheme” or extortionary as alleged by the petitioner.

It said that the third telco must not only be technically capable but should also have the “financial muscle” to compete with current telecom giants, Globe and Smart.

It also said that such securities and fees imposed are consistent with the bidding and procurement processes and are actually even lower than those set by Republic Act 9184 or the Government Procurement Reform Act.

The OSG explained that the participation security aims to ensure participation of serious contenders, who have the required financial capability to be a third player that can compete with the existing duopoly. The participant is given certain options on what form they wish to put up the security such as cash, bank drafts or letters of credit.

Performance security, on the other hand, seeks to assure the government that the third telco will deliver its commitments for the 5-year commitment period. Requirements for cash deposits have been removed and the participant has been given options as to the forms provided in the TOR.

Lastly, the NTC said the appeal or protest fee is a usual item in the procurement processes, which will discourage frivolous motions and protests.

Calida also rejected NOW’s allegation that the commission did not hold consultations in approving the TOR, saying it was the “result of public consultations and hearings, review by the Oversight Committee and lengthy and comprehensive studies with international consultants” and that “public and stakeholders also had the opportunity to submit their position papers on the matter.”

Under the assailed final TOR issued by NTC, the winning bidder will be chosen based on the highest committed level of service for over a period of five years.

It set three criteria - national population coverage with a weight of 40 percent, minimum average broadband speed at 25 percent and capital and operating expenditure at 35 percent.

The rules also provide that the minimum population coverage for the first year should be 10 percent, a figure that should reach 50 percent by the fifth year.

The new player is expected to invest a minimum of P40 billion in the first year and P240 billion in the next five years.

The selection committee will use a point system based on the documents submitted by the potential players.

After the submission of bid proposals, the NTC will formally open the bidding selection on Nov. 10. The government hopes to name the third telco before the end of this year.

The NTC earlier welcomed the decision of Manila RTC Branch 42 Judge Dinnah Aguila-Topacio to deny the plea of NOW for the issuance of a temporary restraining order.

NOW Telecom is one of the 10 companies and consortiums that have participated in the bidding for the third telco so far and paid the P1-million participation fee.  But its mother firm, Now Corporation, only had an operating income of P6.3 million in 2017.

The nine other bidders so far are Chinese state-owned firm China Telecommunications Corp., Austrian firm Mobiltel Holdings GmBH, Dennis Uy’s Udenna Corp., the joint venture of businessman Chavit Singson’s LSC Group of Companies and TierOne Communications, Norway’s Telenor Group, Philippine Telegraph and Telephone Corp. (PT&T), former congressman Felizardo Colambo’s AMA Telecommunications, and two undisclosed companies.

The Streamtech Systems Technologies Inc. of former Sen. Manny Villar, which recently secured its franchise to operate, is also reportedly joining the bidding for the third telco.

Last month, the Manila RTC denied NOW Telecom’s prayer for issuance of 20-day temporary restraining order for “lack of urgency in the meantime justifying such a provisional remedy.”

The court instead heard the case last Oct. 23 and 24 and yesterday before it decides on petitioner’s plea for issuance of preliminary prohibitionary injunction later this week.

Topics: Mel Velarde , NOW Telecom Co. Inc. , National Telecommunications Commission , Jose Calida
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